What happens when a person buys shares in a mutual fund?
A) The person indirectly becomes owner or creditor to many companies.
B) The person lends to and borrows from the other shareholders in the mutual fund.
C) The person receives a fixed interest as long as he or she does not sell the shares.
D) The person lends money to the federal government.

Question

Quizplus · Accepted Answer

When a person buys shares in a mutual fund, they are pooling their money with other investors. The mutual fund company then uses that pooled money to buy shares in various companies, making the person an indirect owner or creditor to those companies. The person's return on investment is based on the performance of the companies the mutual fund has invested in.

What Happens When a Person Buys Shares in a Mutual